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Us 14, U.s. 7, Washington 6, Virginia 5, D.c. 4, Simpson Bowles 4, Olivia Sterns 3, Chuck Hagel 3, Ukraine 3, Tesla 3, Frank Keating 2, Los Angeles 2, William Cohen 2, Russia 2, Lockheed Martin 1, Carl Icahn 1, John Donahoe 1, Andreessen 1, Ciccone 1, William Clinton 1,
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  Bloomberg    Taking Stock With Pimm Fox  

    February 26, 2014
    5:00 - 6:01pm EST  

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of "taking stock from washington, d.c. on this wednesday, february 26, 2014. i was a partisan than at the takingrg defense summit
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place at the ronald reagan building. we spoke with senator mark warner. tony hawk will talk about the olympic sports and maybe a little bit of white house exploits. let's get headlines from olivia sterns. close of u.s. trading, jcpenney, the struggling retailer posted its first quarterly profit in more than two years and shares rallied in after-hours trades. retailers return to discounting at last. was $35 million in the quarter compared to a loss year earlier.n a a little bit better numbers from jcpenney but coming off of a very low comparative figure. tesla out with details on its so-called giga factory plants. this could help to drive down the battery packs.
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they hope to make investments my the year 2020. they will invest $2 billion. aboutlso see volume at 500,000. an activist investor carl icon escalating his attack on john donahoe, the ebay ceo. carl icahn sent his letter to shareholders highlighting the leadership of mark andreessen and scott cook. ebay holds the claims quote ebay calledlse -- the claims "blatantly false." >> my next guest turned what kids did for fun into a
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moneymaking sport. he turned pro by the time he was 14. since then, he is taking skateboarding mainstream. he is taking his clothing line global. tony hawk's one generations chairman of the board and he joins me now from los angeles. great to have you with us. tell us a little bit about how you managed to turn skateboarding into almost , onything, a videogame online experience as well as the clothing line. what haven't you done yet? >> well, i just did things that i felt were intuitive and that were easily associated with our culture and our sport. skateboarding is not so much a sport as a lifestyle. there is so much night that transcends in terms of music and fashion and entertainment. that is what i wanted to do.
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i wanted to promote skateboarding in the best way possible through different media as well. >> using different medium, you have put together a foundation. tell us what you are doing. >> my foundation supports public's state parks. we try to empower communities that have already gotten the ball rolling in terms of petitioning the city or holding fundraisers. we give them the resources and funding to get the parks built. today, we hope to build over 500 skate parks and we have given away over $4 million. >> i guess you can buy the clothing, tell us about the clothing. >> we do clothing. for the last few years, we are cherokee.out through i'm excited because i feel like it is a brand and it is
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something that is rather iconic with our sports but we have never been able to do it outside of the u.s. on a bigger scale and now we will do that with their resources. >> tell us about the ride channel, about using the internet to bring specialized programming to the people that want to you watch you and other skateboarders. >> this is a youtube channel that we started. we did it in conjunction with google. . basically, it covers all sorts of state centric content from new tricks to interviews, bands that enjoy skateboarding and i interview celebrities as well, people that interest me. people that i admire and have access to. >> what kind of expense does it take. how much money does it cost to create these kinds of channels? can you give us an idea of what happened at the beginning and what kind of numbers we're talking about currently?
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>> in the original -- and the beginning, we try to create a ton of content. we started to realize what works, what people are watching and what they holding onto. our budget is half of what it was. we have more viewers than ever. >> when you say the budget is half of what it was, what are we talking about? half of what it was meaning it might have been in a million dollars? just give us a range. looks like a million a year. -- >> like a million a year. >> you have to keep the pipeline full. people always want to be the
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next champion. >> i am always looking for new talent in terms of appreciation but also for ideas and inspiration. are tomhe top guys now rusco., nikki b another guy was just in sydney. he has really come into his own. still playing video games. people will ultimately challenge you. we are working on a mobile game. we are working on a game from all of devices. exclusivelyr gone
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that direction yet. amount ofd, from the time that people are spending on their phones and tablets playing games, we have never had our own game in that space. >> three and a half million followers on twitter. is that considered a good thing for you, tony? when you get three and half illion people doing anything, love to share what i'm doing but also stuff that is outside of just my personal world. it is a great way to communicate, to be honest. it is the best focus group i've ever had. >> is that we use it for, to check out what is working and what is not? you can measure the direct financial benefit of twitter. >> i have not been able to measure that and that is not why i got into it. i do not concern myself that much. i have given speeches about
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.ocial networking i like to do fun stuff. all over the world and just tweet out of the clues as to where it is. >> skateboards and other products. when will you be putting this out? this is on the skateboard treasure hunt. >> this is the 17th. maybe this is just in time for the easter eggroll on the lawn. i'm about two blocks from the white house. tell us about your experience in entering the nation's capital. there is some celebrity athletes to talk about to theood and i went
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white house so i brought my skateboard. mostly because whenever i travel without my skateboard, everybody asks me where it is. i just brought it for good measure and i found myself in a hallway alone and realized i could skate down the hallway and get a photo of it. it sparked some controversy. people thought i was disrespecting the white house. i was doing the actual thing that brought me there. i felt like i was honoring it in some way. >> let's say that you can date for down the hall from the white house. what about in the summer olympics, would you like to do that? >> i might be past my prime is a professional in terms of competing. i think the olympics will benefit as much as skateboarding will benefit from being in there because they don't have that youthful edge in the summer games the way they do the snowboarding and the winter games. i'm surprised it has taken this
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long. it is very likely to be in the 2020 games. >> we will look forward to it. maybe you will be the coach. tony hott joining us from los angeles. this state of course was heavily affected by any changes. we will get some details.
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fromis is "taking stock" washington, d.c.. i'm here to take part of a defense summit. now, virginia, virginia .conomist
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virginia collected $57 million. tummy but the proposal by chuck hagel in his defense proposed budget. >> i take three things away. for the next fiscal year, for the next calendar year, i am concerned that he has put forward starting a debate around some of the pay, retirements, tri-care, commissaries, and what
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is so challenging about that, it would appear that if somehow they are getting singled out ahead of the rest of us and we have not been willing to take on the more major entitlement reforms that i think the country desperately needs. virginia standpoint. not takingy are major cuts this year when the dreaded sequestration comes back in fiscal year 16, all of these things will be up for grabs. it reinforces the issue that i think is the most important issue we have to still grapple with. we have continued to kick the can on the need for the grand six or or the gang of simpson bowles.
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frankly, we haven't done that yet and we will see with sequestration cuts coming back in place that if we don't do that, such is the jerk on the ciccone in nature which will do to our defense. >> is it realistic that anything else will come out of this debate over the defense budget when you are looking at midterm elections. i think the budget will change clearly, those of us in congress will weigh in. people were high-fiving the fact that we would not do a shutdown, that is great. 18-24 montht an window. we have punted on the ultimate issues which are driving the
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deficit with $17 trillion in debt. that is a failure on the democratic side and i am a democrat. tax reform that will not only simplify the tax code. this is to simply pay our bills. >> let's talk about bills that specifically the kind that get printed. isust -- and the new chair scheduled to testify tomorrow. her is we will hear from a projection of the continues to recover. we have the fact that moved from washington being net negative on the economic recovery, maybe the neutral. can be a positive aspect. a number of members will press on when we will see some additional relaxation and quantitative easing. >> is that what you're going to
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ask? are those the questions you'll ask? >> by the time they get down to me, i'm sure that they will be asked. one of the areas that i want to highlight is one of the coming fiscal crisis that we have to get ahead of her. we have now had a true billion dollars in student debt that exceeds credit card debt. we are starting to see the price diminish state and the federal support. with the rising college costs, we bought that off with debt. that is coming to an end. i would like to get some more comments on that subject. >> we look forward to that. i want to thank you very much, senator mark warner, democrat from virginia. ,"ming up on "taking stock jcpenney reported their first courtly profit in two years.
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what does that mean for the retailer? we will look at shopping on "taking stock."
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quakes jcpenney posting its first quarterly profit in two years. we want to bring in k he was joining us from new york. fifth a board member of and pacific, a company formerly -- n as kay koplovitz, a pleasure to have you with us. you have some details on their results. what do you think of their progress? >> i think they are making some rugrats.
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it really takes a long time to turn around the company that has slipped to the degree that they have in terms of the customer base and their sales. i think they are on their way and making some changes. as they said, it will be slow growth. they have a turnaround plan for the next 3-5 years and i think they are on that plan. >> what would it take to get them shopping at a jcpenney. some lovelyhey have brands. they have a former brand of hours, liz claiborne. bring you up to date on that. it is now known as the company. jcpenney i think it is really
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just getting the customer back. they are doing that. it just takes time once people have sort of left the store. it takes time to get them back. >> talk about abercrombie & fitch. , talk about the abercrombie & fitch brand. i think it is a recalibration of not only the number of stores and the customers that they are serving.
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this is a fairly fickle one. you have to really work hard to get that customer back. that is where there challenges. do you think that they are going to have an initial public offering for j. crew? >> that isn't offering for them. they're are doing well as a brand. this is brought privately. they are bringing some changes on their own. a little bit easier to do in a private company than a public company. they have had a turnaround. that is very difficult. i think they j. crew is going to come back stronger. >> i want to thank you very
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much. coming up, you will hear the .uture we will speak with william cohen next.
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onthis is "taking stock" bloomberg. for a look at the market moving headlines, i want to go to olivia sterns. >> purchases of new homes rose unexpectedly during the month of january. it increased 9.6% to the highest level in five years. this indicates strength in the industry. housing,ny aided by this posted a fourth-quarter profit gain. this is a housing rebound.
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the second-largest home improvement is announcing plans to buy back $5 billion worth of shares. deen is heading back into the kitchen. she opened her first restaurant center scandal in which she made racial remarks. kitchenled the family it will cost $25 million to build. >> thanks very much, olivia sterns. fromis "taking stock" washington, d.c. i am pimm fox. proposal.l has sent a served as secretary of defense -- as the cohen served
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secretary of defense under william clinton. he also served in the house of representatives. toning us now to discuss the state of the military and the state of politics. you get that money, you figure out how to spend it. what is your take on the budget. devil made me do it. the congress of the u.s. has mandated that the defense department take a half $1 trillion out of its spending programs. fixed on thes now problem. he has come up with a proposal to cut back on the number of personnel and that is where you get the quickest spin down in taking money out of personnel because that is where you have a very high costs involved. he is reducing the size of the military by some 70,000.
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the marines.ut of he is cutting some old systems, retiring them and putting more money into new systems. if congress doesn't like it and congress controls the purse strings, the president proposes, congress proposes. congress will have to decide do we propose more money or do we have a different balance in keeping some of the older systems, some of the more heavy programs that we have, or do we go with the threats of the future? chuck hagel has said my intelligence community tells me that these are the likely threats. we want to shape our forces in the way to meet those threats most successfully. we are moving closer and closer to net centric warfare. this question becomes, what happens if those get disrupted? so, you have hacking taking place in some the most expensive
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.ystems the question becomes has reduced the size of our force going from thet now, 520 thousand in army, active-duty, down to 400 and 50 is a proposal. you going and taking that. is that too far? in 2016, we will get down to 420 thousand. now you're getting to the level where there is a plan b but you will not have the kind of forces you will need the numbers to carry that off? yes proposed a balanced approach. i think you will run into opposition. >> is that going to be for political consumption because there are constituents involved? where there have to be some independent base closing commission's as we have already had which takes the details out
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of the hands of congress? there is another base closure. i think is important that they do so. the question is, if you are carrying all of this excess capacity and you are paying for it even though we will not be relevant to the future, if we have them, we are really squandering taxpayer money. either you pay more money, you say you want a bigger force and are willing to pay for it, not put the tax burden on our kids meaning we are willing to pay for it by taxing ourselves to pay for it and not simply borrowing the money. we have been borrowing from our children or you and i were growing up. the parents used to borrow for us and now they are borrowing from us and the parents are taking away from their kid. there is an opportunity for congress to say, ok, we are serious about cutting the federal dead and that is a
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serious national security threat. if you look at the half a trillion mere adding to the national debt, summit he has to pay that. at some point and time, your kids and grandkids will not be able to pay for it. >> they have to look like they're going in that direction. >> here's the plan where we get to that point. so, i think that chuck hagel has come up with a proposal which is bound to be controversy over. , that is how we propose cutting it. >> this proposal might be taking it to about 500 billion but i'm told that it is not really 500 ,illion, it is more like 580
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five hundred 90 billion. >> this would look like 486 billion. the president has talked about putting money on top of that for procurement purposes. afghanistan, basically, and some of the other hotspots that we might be called upon to go. >> if you are above that level, what is the possibility that this is going to get through in the form that it currently exists? >> it will be difficult. congress will belly up to the bar, so to speak, saying you are mandating that we make these cuts. this is how i would do it as the secretary of defense, he is speaking. here is my proposal, that we slimmed down the size of the force and make it lighter and more lethal. give our troops the most capable military equipment in the world
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to make sure we are still the number one fighting force in the world. here is how we can do that. if you list those constraints, i can't do something else. >> do they change the thinking or reinforce the thinking that the budget proposes? >> i don't think there is any concept of the u.s. committing any land force into the ukraine. of those issues. the russians, should they be committing a land force into the ukraine? i think he will squander the 50 billion or 60 billion he spent in the olympics. this will accelerate the development of the fellow -- of alternative sources of energy. you will see fracking going on on steroids. we have to reduce the power of the russians that are behaving this way. the power comes to guns and gas. if we can reduce the dependence on their oil and gas, they will have less power and president
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cutin will not be that popular and the russian people might think there is a better way to go. you to knowthem rip that? >> i think he knows that and i think he is flexing his muscles to show that he still really powerful, in the military sense at least. basically, that system, depending upon guns and gas cannot survive in the long-term. they have got to reform their system so it is not state-owned, it is not a bunch of oligarchs and a bunch of corruption that infiltrates the entire economy. that is what is happening in the ukraine and not what happened in russia -- and that is what has happened in russia as well. >> thank you for joining me, the former senator, congressman, secretary of defense, william cohen. coverage continues from washington. this is "taking stock" on bloomberg.
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>> my next guest is a veteran of the defense sector. he has worked in industrial stocks, prudential security, this is before establishing the aerospace security fund. he joins me now. , great to have you with me. we spoke about the changes in the coming defense budget. if there are changes, there will be winners and losers as investors, what should we look for? are thenk the winners large defense primes which have a focus on the large programs being protected in this budget. some have been cut. they really don't have that much consistency.
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is not an easy way to look at this. >> there is no reason to sell your general dynamics. >> people knew the army is taking some cuts as they discussed. a lot of that had been discounted by the stocks, in particular, general dynamics. or threerobably two weeks ago. >> what is the contract for? >> it is for light armored vehicles. it is being done out of the plant may have in canada. it is probably a 10 or $13 billion program with the saudi's. as the big defense companies, they understand what is going, what about mergers and acquisitions? >> i think we will see increased merger and acquisition activity ammann not among the large primes. the department of defense is clear that they don't want to see lockheed martin with
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northrop grumman. there is clarity that has emerged with this budget. seeill probably start to more portfolio reshaping. then the smaller companies from the services area, you will see more consolidation. >> what about small companies that are not necessarily thought of as being in the military industry but have services and products that can be adapted easily to military use? >> it has been running during being. you have some very interesting enterprises like elon musk space . which developed tesla they have been very active in the military space market. that is not a new theme, necessarily but i think it will probably be reinforced. the last point, the kinds of human resource services that veterans need, the bookkeeping,
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the payroll. that tends to fall not among the defense. you have to look at the large health care providers in the u.s. ibm. like accenture, they provide more services to the veterans it ministration. >> thank you for joining me, byron callan. fight going on in washington, d.c. dave camp is proposing a major overhaul of u.s. tax code. he wants the tax rate for corporations as well as individuals to reduce to 25%. one part of his plan is a new tax on the largest u.s. banks. for more, i'm joined by frank keating, the president and the chief executive of the american bankers association. he is also the former governor of oklahoma.
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let's talk a little bit about by congressman camp. do you see any merit in what he is trying to accomplish? >> i think one merit is that the conversation about eliminating the deficit and in eliminating the debt has begun again. simpson bowles was the president's creation, nothing happened. i was on the panel, a lot of excellent ideas, very similar to simpson bowles. he is a very capable person to talk about. doinguzzled by what he is . what he is proposing is a 10% surtax on joint filers who make 75,000 dollars. take abanking space, to trillion dollars of lending out of the economy over the next 10 years doesn't make any sense.
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all of these other panels and debates that we have had in a bipartisan way had made some excellent recommendations. this one is a nonstarter, at least both parties appear to say that is the case. i wish we would have a serious debate about entitlements. that is what is bankrupting the country and getting red of all the deductions and exemptions and credits that provide no economic value to the country. >> do you think that this ifposal by congressman camp, you say it is dead on arrival, why did he do it? >> well, he is leaving office and maybe it is a legacy statement. he is a very thoughtful person. not puzzled by why he did bring our panel and simpson bowles and take the best and brightest ideas that of those. i'm sure there will be a lot of blood on the floor when you start fundamental tax reform as
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a national debate, a national conversation. remember this, by the year 2025, every cent of federal tax revenue will go to medicare, medicaid, social security. that insolvency statement is looming on the horizon and it is driven by demographics. the good news, we live longer, the bad news, we live longer. to attack the saving side, the investment and the lending side to help pay makes no sense. they are creating jobs and opportunity. >> thank you for joining us, frank keating. the president and chief executive of the american bankers association. i will tell you why apple is still the world's top brand.
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>> can the blackberry brand make a comeback? we're are joined by that technology analyst for bgc partners. we are joined by the global chief executive of interbrand, jez frampton. they work in every industry including automotive, beauty care, inking. oft is the brand value blackberry. very?bout the brand >> there has been discussion about applying the multiple to the messaging portion of blackberry. the connotations associated with
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blackberry is one of a company that are struggling to turn themselves around and to find their niche. >> well, is blackberry really on the way to becoming like kodak or blockbuster? we know that blackberry recently appointed the chief executive. he had something to say about the prospects of the company. he says they can rebuild the firm. >> i take that the direction that they are going in might get a sense of their future. especially in government and being a solution provider. this plays well to their historical sense and is a wise place for them to play in the future. it dropped off of our top 100 list.
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if they do focus, that is the thing that will be required. this could be a brand focused, very much on the business into price space and playing on its virtues like very good security. >> let's talk about who is at the very top of the list. what makes apple so fabulous? >> there are three things that we look at when we value brands. one of which is how much money you make and where you make it? the second things are more to do with the degree to which it encourages you to choose. the brand is a major part of the reason why we choose their products. they don't necessarily have the individual operations, the individual devices. the ipod was never the best mp3 on the market.
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is bring together everything in a way which is easy and pleasurable to use. as a brand, it is extremely desirable. is a big part of the choice. the other thing is how long people are liable to choose it into the future. apple has a very strong brand. brand, doesa strong it affect the stock? >> if you look out at apple and blackberry and you see the performance of the two stocks, you would think, if i told you that one is up north of 30% and the other is down eight percent, you would not think about apple being down for the year. the reality is that they are number one. this is a problem with the stock. there is very little room for the company to go. positionnly maintain a and ultimately fall back. >> i want to thank you very much.
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for "taking stock." .
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>> live from pier 3 in san francisco, welcome to the late edition of "bloomberg west," where we cover the global technology and media companies that are reshaping our world. i'm emily chang. our focus is on innovation, technology, and the future of business. tesla is taking steps to build a battery giga factory. it could cost $5 billion. they're offering up to $1.8 billion to fund it by pumping out more batteries, they're hoping to make more and more affordable electric cars.